£330bn could still be spent on North Sea – study

Up to £330 billion could be spent on oil and gas extraction in the UK Continental Shelf (UKCS) over the next 32 years, according to the UK’s Press Association, citing a new study.

Professor Alex Kemp and Linda Stephen from the University of Aberdeen used financial simulation modelling to assess key exploration and development.

The study concluded: “The overall conclusions are that in current circumstances the remaining potential in the UKCS is very substantial.

“The important caveats are that the benefits of the painfully-achieved cost reductions, and the productivity gains from enhanced production efficiency have to be maintained.”

The Press Association reported the study indicated that the “ambitious” targets set out by the UK’s Oil and Gas Authority are achievable in the context of recent oil and gas prices.

In one model, using $60 per barrel and 55p per therm of gas, the study found 14.8 billion barrels of oil equivalent (bn boe) could be produced between 2018 and 2050.

Under this scenario, development expenditures could accumulate to £124 billion by 2050 at today’s prices while operating expenditures could accumulate to £147 billion by 2050 and decommissioning expenditures to £53 billion, the Press Association reported.

The study paper stated: “It should be stressed that there are significant downside risks relating to this finding.

“In particular the achievement of 14.8 bn boe depends substantially on the development of 421 new fields of which no less than 295 are in the category of technical reserves.

“The development of these fields is by no means certain even though they pass the stipulated investment hurdle.

“They are not yet at the planning stage.

“For the nearer term in particular much depends on the ability of investors to take advantage of the current physical capacity of the supply chain to proceed with projects.”

When a price level of 70 dollars and 60p in real terms was used for modelling, long-term activity was found to be significantly higher.

Under this scenario more than 17 billion barrels could be recovered by 2050.

Field development expenditures accumulate to £158 billion, and field operating expenditures accumulate to £172 billion.